Bridgeport Pix currently uses a six-year-old molding machine to manufacture silver picture frames. The company paid $95,000 for the machine, which was state of the art at the time of purchase. Although the machine will likely last another ten years, it will need a $10,000 overhaul in four years. More important, it does not provide enough capacity to meet customer demand. The company currently produces and sells 9,000 frames per year, generating a total contribution margin of $93,000. Martson Molders currently sells a molding machine that will allow Bridgeport Pix to increase production and sales to 12,000 frames per year. The machine, which has a ten-year life, sells for $133,000 and would cost $14,000 per year to operate. Bridgeport Pixs current machine costs only $8,000 per year to operate. If Bridgeport Pix purchases the new machine, the old machine could be sold at its book value of $5,000. The new machine is expected to have a salvage value of $19,700 at the end of its ten-year life. Bridgeport Pix uses straight-line depreciation. Click here to view the factor table: https://education.wiley.com/content/Davis_Managerial_Accounting_4e/media/simulations/pv_tables/Tables_App_9-1_9-2.pdf

(a) Calculate the new machines net present value assuming a 14% discount rate. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 0 decimal place, e.g. 58,971.)

Answer: Net Present Value is $13,639.09

(b) Use Excel or a similar spreadsheet application to calculate the new machines internal rate of return. (Round answer to 2 decimal places, e.g. 1.25%.)

Answer: Internal Rate of Return is 16.57%

(c) Calculate the new machines payback period. (Round answer to 2 decimal places, e.g. 1.25.)

Answer: Payback period in years is ???